Bills that Would Expand and Increase the Tobacco Excise Tax Pending in Congress

Little has transpired on two bills that would expand and increase the excise tax on tobacco products. Pending in Congress are S. 1837, introduced by Senator Richard J. Durbin (D-Ill.), and H.R. 729, introduced by Congresswoman Brenda L. Lawrence (D.-Mich.).

Senator Durbin’s bill would increase taxes on pipe tobacco, processed tobacco, smokeless tobacco, and certain cigars with the aim of equalizing the tax with cigarettes, small cigars, and roll-your-own tobacco. Annual adjustments for inflation would also be taken into account. In addition, the bill would extend the excise tax to all tobacco products covered under the Federal Food, Drug & Cosmetic Act, such as e-cigarettes, bringing presently-untaxed products into its sweep.

Congresswoman Lawrence’s bill would accomplish much of the same; however, it would result in further tax increases. It would also address various matters related to transfers of machines for tobacco production or manufacturing, markings and labeling on packaging, and recordkeeping and reporting, among other things.

The enactment of either bill would have widespread effects in the tobacco industry. Perhaps the most profound change would be applying the federal excise tax regime to presently-untaxed electronic cigarettes and other vapor products. Smoking pipes and other accessories would also be brought into the fold.

Senator Durbin’s bill was referred to the Senate Committee on Finance on September 19, 2017. Congresswoman Lawrence’s bill was referred to the House Committee on Ways and Means on January 30, 2017.

It will remain to be seen how these bills fare in the present Congress. Of note, Senator Durbin introduced similar bills in 2015, 2013, and 2012. None of those bills made it out of committee.

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